Total Costs equal Production costs plus Non-production costs.

• A. Production costs minus non-production costs
• B. Production costs plus Non-production costs
• C. All costs plus overhead
• D. Variable costs plus fixed costs

Answer: (B)

The total costs in cost accounting are formed by adding together what it costs to produce goods (production/manufacturing costs) and the costs that aren’t directly tied to producing goods (non-production or non-manufacturing costs). Production costs cover things like materials, direct labor, and overhead applied to production. Non-production costs cover selling, admin, and other period expenses. So the total cost equals production costs plus non-production costs.

Subtracting non-production costs from production costs would give a difference, not a total. Saying all costs plus overhead would double-count overhead since it’s already included in production costs. Breaking costs into variable plus fixed doesn’t account for the explicit distinction between costs connected to production and costs that aren’t.